Publication year

Due to the conflict, Ukraine’s economy has shrunk considerably, which also manifests economic mismanagement of the past years. The country’s outlook remains highly uncertain as the government hasn’t managed to set the economy on the right course yet.

Ukraine’s economy shrank considerably last year, due to a conflict in eastern Ukraine and economic mismanagement in the past years. The country’s outlook is highly uncertain and depends on external assistance and on how the conflict evolves.

While the financing deal with Russia alleviates Ukraine’s external financing pressures, the deal is not without risk. The anti-government protests have increased pressure on President Yanukovych’s hold on power. Meanwhile, the domestic currency remains under pressure.

The political situation in the Ukraine is troubling, since President Yanukovych is ruling Ukraine in an authoritarian manner. The economy is in bad shape as the country is running twin deficits and in desperate need of additional external financing.

The external financing risks for the Ukraine have markedly risen, since the IMF has discontinued disbursements under the two and a half year lending program of USD 15.2bn signed in July 2010. In 2012, economic growth is expected to slow to 2.5%.

Ukraine’s country risk profile has improved somewhat recently, but overall risks remain high. A new government, controlled by the party of newly elected president Yanukovych, has taken power, which has ended the political paralysis and infighting of the preceding years.